by Jeremy Scott
... [T]he details of the Simpson-Bowles plan, originally released in December 2010, have gradually become distorted - so much so that even reform efforts supposedly inspired by the commission's report aren't all that similar. So Simpson and Bowles have decided to try a second time. And once again, those who want to see tax reform should understand that a Simpson-Bowles plan is first and foremost about deficit reduction.
The second Simpson-Bowles plan is less ambitious than the first in total deficit reduction, but that is because the authors take credit for a lot of deficit reduction that has already happened, including the spending cuts that are part of the sequester and the tax increases in ATRA. In their summary memo, they have grayed out the first two steps of their four-part plan, presumably because policymakers have already acted on them. The second plan is essentially the same as the first, particularly the parts mentioned in the summary.
Tax reform isn't really the point of Simpson-Bowles. According to the authors, the U.S. debt-to-GDP ratio is much too high at 73 percent. It is critical to get it below 70 percent, they say. Their plan would accomplish that...
Tax reform doesn't have to be revenue neutral. But the point of it shouldn't be to increase government receipts or to reduce the deficit. It should be to simplify and modernize the tax code... Payroll taxes, corporate taxes, income taxes, and capital gains rates all must be on the table in a true tax reform effort.
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